There has been a lukewarm response from bidders towards national highway projects under public-private partnership in 2012-13 and 2013-14 due to lack of equity in the market. This was stated by Minister of State for Road Transport and Highways and Shipping Krishanpal Gurjar in Rajya Sabha recently.
In 2013-14, NHAI awarded 17 projects covering a length of 1,435.84 km of which two projects are in PPP mode. In all, NHAI put 21 projects to bid under PPP but none of the projects received any response.
The minister observed that in view of the current market conditions, particularly with reference to the highway sector, the government was focusing on implementing highway projects through the public funded EPC mode. The focus on PPP projects, including on BOT-Toll basis, would be restored once the highway sector gathered momentum through the execution of EPC projects and issues plaguing the concept of public-private partnership were addressed.
The Ministry of Road Transport and Highways and Shipping and National Highways Authority of India have taken various steps to speed up the completion of national highway projects including streamlining the process of land acquisition and other statutory clearances, securitisation of road sector loans, introduction of a revamped dispute resolution mechanism and closer coordination with other ministries.
In other measures, the Ministry of Environment and Forests has delinked the grant of environment clearance from forest clearance for linear projects. It is treating the strengthening and widening of NH projects differently from new highway projects and is allowing the construction of national highways in non-forest areas. Thus, the process for obtaining environment and forest clearances have been relaxed significantly for all existing and future road projects. The ministry will further rationalise the procedure for statutory clearances by minimising the time taken for such clearances.
The Reserve Bank of India has also advised all scheduled commercial banks to treat road sector debt as secured within the limit of 90 per cent of debt due, thus enabling the banks to allocate a larger portion of loans to the road sector and reducing the cost thereon. Concessionaires and developers have also been allowed harmonious substitution and rescheduling of premiums quoted by them.
Last month, Minister for Road Transport and Highways and Shipping Nitin Gadkari had announced that he was trying clear hurdles in the progress of road construction projects worth over Rs. 1.8 trillion. He said the banks were saddled with non-performing assets amounting to nearly Rs. 2.4 trillion related to road projects. As a result, it had been decided to execute highway projects on EPC basis for at least two years.
Gadkari said that a “bank of ideas and innovation” would be made operational in August, wherein the private sector could chip in with new ideas on infrastructure development, and that the government was thinking about post qualification of financial bids in PPP projects to bring about transparency in the PPP framework.
Today, India is one of the largest PPP markets in the world with over 900 projects in various stages of development. In order to streamline the PPP framework, an institution called 3P India with a corpus of Rs. 500 crore has been proposed in Budget 2014-15. Further, a budget outlay of Rs. 37,880 crore has been made for national highway projects as well as state roads. This includes Rs. 3,000 crore for the northeast region.